Week 15 in Brief
Wall Street ended lower on Friday as a barrage of mixed economic data appeared to affirm another Federal Reserve interest rate hike, dampening investor enthusiasm after a series of big U.S. bank earnings launched first-quarter reporting season. All three major U.S. stock indexes ended in the red, but well off session lows.
On the heels of Thursday’s robust rally, all three major U.S. stock indexes notched weekly gains.
- The Dow Jones Industrial Average (.DJI) fell 143.22 points, or 0.42%, to 33,886.47
- The S&P 500 (.SPX) lost 8.58 points, or 0.21%, at 4,137.64
- The Nasdaq Composite (.IXIC) dropped 42.81 points, or 0.35%, to 12,123.47.
How Did the U.S. Market Perform?
- The S&P 500 banking sector jumped 3.5% and JPMorgan Chase surged 7.6%, its biggest one-day percentage gain since Nov. 9, 2020. Citigroup advanced 4.8% while Wells Fargo edged 0.1% lower.
- Advance retail sales in March showed consumer spending fell twice as much as expected. Retail sales declined by 1% last month, more than the 0.5% drop expected by economists polled by Dow Jones, in part because consumers paid less for fuel.
- BlackRock Inc. rose 3.1% after the world’s largest asset manager beat quarterly profit expectations.
- Boeing Co slid 5.6% after the planemaker halted deliveries of some 737 MAXs due to a supplier quality problem attributed to Spirit AeroSystems (SPR.N), whose shares fell 20.7%.
- Shares of Lucid Group Inc dropped 6.3% following the luxury electric automaker’s disappointing first-quarter production and delivery numbers.
- Elsewhere, UnitedHealth, which has the biggest weighting in the Dow, fell 2.7% after what Mizuho described as a “modest beat and raise.” The action came after UnitedHealth said it’s spending more for new diabetes and weight loss drugs from Novo Nordisk and Eli Lilly.
How Did the European Markets Perform?
- The pan-European Stoxx 600 index provisionally closed 0.53% higher, its fourth consecutive positive session. It takes its gains for the week to 1.15%, according to Eikon data.
- Banking was the top sector, up 3% after results from U.S. banks JPMorgan, Citigroup and Wells Fargo beat estimates.
- European Central Bank policymakers have been backing more interest rate increases, with ECB President Christine Lagarde saying underlying price pressures, boosted by rapid nominal wage growth, are likely to remain high for some time.
- Hermes rose 1.5% to a new record high after the luxury firm’s first-quarter sales beat market expectations, helped by strong demand from China.
- TomTom jumped 7.3% after the Dutch navigation and digital mapping company reported surprise first-quarter profit.
How did Asian Markets Perform?
- Asia-Pacific markets largely rose on Friday, following the moves of Wall Street as the U.S. producer price index signaled further signs of cooling inflation.
- The Monetary Authority of Singapore maintained its monetary policy as its core inflation remains at the highest levels in 14 years. The economy saw a quarterly contraction of 0.7% and a marginal growth of 0.1% year-on-year, advance estimates showed.
- Japan’s Nikkei 225 led gains in the region and gained 1.2% to finish the day at 28,493.47, and the Topix advanced 0.54% to close at 2,018.72 .
- In Australia, the S&P/ASX 200 rose 0.51% to end at 7,361.6.
- South Korea’s Kospi closed 0.38% up at 2,571.49 and the Kosdaq rose 1.07% to end at 903.84 as North Korea released a statement on its latest missile launch into the waters between Korea and Japan.
- The Hang Seng index in Hong Kong was up 0.27%. In mainland China, the Shanghai Composite rose 0.6% to close at 3,338.15 and the Shenzhen Component gained 0.51% to finish at 11,800.09.
Bonds and Commodities
- Oil prices were up and secured a fourth straight week of gains after the West’s energy watchdog said global demand will hit a record high this year on the back of a recovery in Chinese consumption.
- Brent crude futures settled at $86.31 a barrel, rising 22 cents, or 0.3%. West Texas Intermediate crude futures (WTI) settled at $82.52 a barrel, gaining 36 cents, or 0.4%.
- The yield on two-year Treasuries, which move in step with interest rate expectations, jumped 11.6 basis points to 4.093%, while on 10-year notes they rose 6.2 basis points to 3.513%.
- Gold prices pulled back sharply after surging to a more than one-year peak in the last session, as the dollar bounced and a Federal Reserve official flagged the need for another interest rate hike.
- Spot gold was down 1.8% at $2,003.60 per ounce by 01:52 EDT (17:51 GMT). U.S. gold futures settled 1.9% lower at $2,015.80.
- Silver was down 1.8% at $25.34 per ounce, after rising to a year’s high of $26.07 earlier in the session, and is set for a fifth weekly gain.
- Platinum fell 0.6% to $1,040.42, while palladium slipped 0.4% to $1,493.61, but both were on track for weekly rises.
- The dollar index bounced off a one-year low against a basket of currencies on Friday after some March retail sales components were not as weak as some economists had feared, while a key Federal Reserve official warned that the U.S. central bank needs to continue hiking interest rates to bring down inflation.
- The euro fell 0.44% to $1.0999 after hitting $1.10755, the highest since last April. The dollar gained 0.91% against the Japanese yen to 133.78.
- Turkey’s lira is likely to drop sharply and could near 30 to the dollar following next month’s elections, bankers at JPMorgan have predicted, if it looks like only modest changes will be made to its unorthodox economic policies.
- Cryptocurrency ether leapt more than 5% in early Asia trade on Friday as traders breathed a sigh of relief that a software upgrade this week ran relatively smoothly. The second-biggest cryptocurrency by market capitalisation, ether rose to as high as $2,130.80, the most since May 2022.
Next week will see the onset of earnings season, with some of the largest global companies such as Bank of America, Johnson & Johnson, Lockheed Martin, Morgan Stanley, Netflix, Procter & Gamble, Tesla, IBM, and American Express among many others, scheduled to report earnings.
The housing market updates, including March housing starts, building permits, and existing home sales, and the NAHB’s Housing Market Index for April, will also be available. Furthermore, inflation readings from the U.K., eurozone, and Japan, along with first-quarter GDP figures from China, will be released.
On Monday, the U.S. Supreme Court will hear arguments in Slack vs. Pirani, a complicated securities law case that could impact investors’ ability to sue companies over alleged misstatements or omissions in their registration statements during direct listings. The case could potentially have significant implications for direct listings by either making them more attractive or eliminating them as a viable option.